Farmers take AB-InBev to competition watchdog
South Africa | Farmers in South Africa have filed a complaint with the country’s competition watchdog about AB-InBev’s decision to change its pricing formula for buying malting barley, media reported on 7 May 2018. Reportedly, farmers worry the new formula will leave them worse off.
The farmers’ lobby group, Grain South Africa, has sent its complaint to the competition watchdog because it believes that AB-InBev has contravened one of the conditions set when the country’s Competition Tribunal approved its purchase of SABMiller. The Competition Commission investigates cases before deciding whether to refer them to the Tribunal for adjudication.
In a letter to farmers in the barley growing region of Western Cape province, AB-InBev reportedly said it was changing what it will pay for the 2018 barley crop to 97 percent of the price for top grade wheat (B1) from 102 percent of second tier wheat (B2).
AB-InBev is said to buy 85 percent to 90 percent of the malting barley grown in the country.
The pricing formula AB-InBev wants to change was set by SABMiller in 2009. Previously, the barley price was negotiated each year but farmers found it difficult to plan production and mitigate risk. Finally, in 2009, barley prices were tied to the price of wheat futures on the Johannesburg Stock Exchange.
As part of the merger approval, AB InBev has agreed to increase the amount of barley it buys in South Africa to 475,000 tonnes from the 415,000 it hopes to get in 2018. In 2017, South African farmers are estimated to have harvested about 300,000 tonnes of barley. In cases of shortfalls, South Africa has imported barley from countries such as Australia and Canada.
